With elections round the corner and political concerns weighing heavy on its mind, the Government today advised Corporates to opt for salary cuts over retrenchment of employees.
Addressing the 42nd session of the Indian Labour Conference, External Affairs and Finance Minister Pranab Mukherjee said: “Jobs must be protected even if it means some reduction in compensation at various levels.” The numbers of unemployed, working poor and vulnerable employed can be highly distressing, he said, and stressed the country’s social welfare net needed strengthening.
According to the latest labour ministry estimates, 500,000 people lost their jobs between October and December 2008, numbers that officials believe could be just the tip of the iceberg. “Many companies have sought government permission to retrench employees,” said an official. W R Vardarajan, all-India secretary of the Centre of Indian trade Unions (CITU), said he expected around 10 million job to be cut by March 2009.
Arjun Sengupta, chairman, National Commission on Enterprises in the Unorganised Sector, said Mukherjee’s advice would be standard prescription in most liberal polities. “In a deflationary situation, pay-cuts at various levels is a common policy response. The only other solution is to increase demand,” he said.
CII Director-General Chandrajit Banerjee said India Inc. would be “responsive”. “The approach of industry has been keeping the context of social implications in mind. Industry would be responsive in its approach.”
Former Ficci president and Rajya Sabha member Rajeev Chandrasekhar, however, said job losses had been largely in the unorganised sector and the small and medium businesses. “Here, talking about pay cuts is irrelevant,” he said.
Mukherjee’s statement came nine months after Prime Minister Manmohan Singh expressed concern over flashy corporate lifestyles and enormous pay packets. At CII’s annual meeting last April, when the global financial crisis had just begun to unfold, Singh had urged India Inc to incorporate an element of sobriety in its lifestyle.
Mukherjee quoted extensively from a recent ILO report that projected the rate of unemployment to rise to 6.1 per cent globally to 18 million new jobless this year
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